Q.3. Port Sohar Company purchased 80% of the outstanding voting shares of Shinas

Question

Q.3. Port Sohar Company purchased 80% of the outstanding voting shares of Shinas Company at the beginning of 2013 for O.R 450,000. At the time of purchase, Shinas Company's total stockholders' equity amounted to O.R 575,000. Income and dividend distributions for Shinas Company for the years 2014 and 2015 are as follows: 2015 2014 R 80,000OR (60,000 ncome (loss) Dividend distributi 40,00 30,00 Instructions: Prepare journal entries for Port Sohar Company for the years 2014 and 2015 to account for its investment in Shinas Company under each of the following assumptions a. Port Sohar Company uses the cost method to record its investment. (5 marks) b. Port Sohar Company uses the partial equity method to record its investment 6 marks) ost method Partial E Dr Cr Dr Cr Email Save

Explanation / Answer

a) Cost Method

b) Partial Equity Method

Date Account Debit Credit 2014 Cash 32000    To Dividend Revenue (40,000 * 80%) 32000 2015 Cash 24000    To Dividend Revenue (30,000 * 80%) 24000

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